IDSA Occasional Paper No. 27
EXPANSION OF THE KARAKORAM
CORRIDOR: IMPLICATIONS AND
PROSPECTS
Senge H. Sering
Institute for Defence Studies & Analyses
INSTITUTE FOR DEFENCESTUDIES & ANALYSES
2 Expansion of the Karakoram Corridor: Implications and Prospects
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3Expansion of the Karakoram Corridor: Implications and Prospects
Introduction
The Paper examines Chinese transport projects in Pakistan
Occupied Kashmir in general and Gilgit-Baltistan in
particular and their impact on local and regional economy
and security. China and Pakistan are in the process of
expanding the Karakoram Corridor1 in Gilgit-Baltistan
which primarily serves the political and strategic interests
of both countries with negligible benefits to the local
people. The current expansion of the Karakoram Highway
and further proposal for construction of rail-track and oil/
gas pipelines is geared towards further cementing the
strategic alliance between Pakistan and China. In the long
run, both countries intend to use the corridor to enhance
economic interaction with other countries in the extended
south central Asian region and to create a political block
comprising of Iran, Afghanistan and some other southern
and central Asian states. This is likely to have significant
impact on the strategic environment in the region.
The information used for analysis in this paper was
collected from primary as well secondary sources. Primary
sources include visit to the area under impact, and
collection of information through interviews as well as
focused group discussions. The interviewees included
government employees, Chinese workers, business
owners, tour operators, students, and religious and
political leaders in both Pakistan and Gilgit-Baltistan.
1 Karakoram Corridor is used as a term to refer to three composite
projects of Karakoram Expressway, Karakoram Rail-link and
Karakoram Oil and Gas Pipeline (OGP). It is used interchangeably
with Karakoram Highway in the Paper.
4 Expansion of the Karakoram Corridor: Implications and Prospects
Sino-Pak Strategic Alliance
China is one of the few countries in the world which has
made optimal use of geography for its strategic benefit. It
has established cordial relations with majority of its
neighbours and regional countries based on common
interests. This interdependence resulting from economic
and security partnerships, often claimed as a diplomatic
and economic victory for China, allows China to obtain the
natural resources required to sustain its economic growth,
extend its sphere of influence through security alliances,
and deny its potential adversaries strategic depth in the
region.
China’s present relationship with its neighbours is totally
different from what it was in the early 1960s, when its
12,428 mile frontier was dotted with hostile nations,
aligned with either the former USSR or USA.2 It was after
the 1962-Sino-India War and the subsequent Indo-Soviet
strategic agreement that China embarked on a counter-
encirclement mission and accepted an offer from Pakistan
2 Before Sino-Pak alliance, China was an isolated country with no
allies in the region. Starting from north-east, it was surrounded
by adversaries like Japan, Korea, USSR, Mongolia, Afghanistan,
Pakistan, India, Thailand, Laos, Vietnam, Taiwan, as well as USA
and other South-east Asian countries. This political isolation also
restricted China from building road and rail connections with its
neighbours to promote commercial activities. It was during this
time that Pakistan – out of its own need to counter threats from
India, Afghanistan and USSR – established friendship with China,
and provided it with the first major overland route to approach
Indian Ocean, the Middle East and African Continent, which is
known as the Karakoram Highway, or simply the KKH.
5Expansion of the Karakoram Corridor: Implications and Prospects
to form a strategic partnership. One may say that China
exploited Pakistan’s geographic and strategic vulnerability
for their mutual benefit and provided patronage to a
country which itself was surrounded by adversaries like
the USSR, Afghanistan and India.
The alliance, which later evolved into ‘a friendship deeper
than the Indian Ocean and taller than the Himalayas’,
marked a watershed moment in the history of how this
partnership shaped the entire global politics. For instance,
with the help of Pakistan, China came to an understanding
with the US in the early 1970s, which helped China to stave
off the threat from the US and build its economy with
American help over the next two decades. Pakistan also
became a point of reference for China to enhance its
diplomatic and economic relations with Middle Eastern
countries. It needs to be mentioned here that Pakistan
gravitated towards China after the Sino-Indian
confrontation in 1962, which ended in a humiliating defeat
for India. Both the countries delimited the disputed
frontier along the Xinjiang autonomous region of China
and the Pakistan Occupied Kashmir3 and since then they
have built the road networks to improve connectivity
between them.
3 Pakistan ceded 1,942 square kilometres of territory in the
Shaksgam valley which provided China with the much needed
terrain to build strategic linkage with Pakistan. In Abdul Hamid
Khan, Chairman , Balwaristan National Front’s appeal letter to
Javier Solana, Secretary- General of the Council of the European
Union , dated 19th August, 2009, avaialbale at http://
w w w . g w a n k . o r g / A u g u s t 0 9 / C h i n a s _ O c c u p a t i o n _
Balawaristan20090820.html
6 Expansion of the Karakoram Corridor: Implications and Prospects
Gilgit-Baltistan: Strategic Importance
Following the ancient Chinese proverb — “To Get Rich,
One Must Build Roads”— the regime physically linked the
politically sensitive but resource rich region of Xinjiang to
Beijing in the east, and Gilgit- Baltistan in the West.4 The
proximity of Gilgit- Baltistan to Afghanistan, Tajikistan
and India, in addition to Xinjiang5 and Tibet, makes the
region a diplomatic, strategic, logistical and political asset.6
For instance, the Karakoram Highway (KKH) gave China
easy access to the Strait of Hormuz and the Suez Canal
which was unimaginable for China until then. KKH, a
1,300 km long stretch of road connecting the strategic
trading post of Kashgar in Xinjiang to Pakistan’s capital
Islamabad, was built by piercing through the formidable
Karakoram- Himalayan (K-H) mountain range (Annexure
I and also see the Map on page 5). The British viceroy Lord
Curzon once said that ‘Gilgit is one of the northern gates
of India, through which a would-be invader must advance,
4 Seymour Topping, the legendary Associated Press journalist
posted in China in late 1940s, and his wife Audrey were the first
foreigners to traverse KKH. They were of the opinion that before
KKH, the only link of China with rest of the world was via East
China Sea. KKH became the most important alternative route to
promote strategic depth in the Middle East and Africa.
5 Throughout the paper, Xinjiang, the historical name of the region,
is used to denote Xinjiang Uighur Autonomous Region (XUAR)
of the People’s Republic of China.
6 Gilgit-Baltistan is surrounded by Xinjiang to the north,
Afghanistan and Tajikistan to her north-west; Chitral to the west;
North West Frontier province of Pakistan to the south; Pakistan
occupied Muzaffarabad region, as well as the Kashmir valley to
the south-east, and Ladakh and Tibet to the east.
7Expansion of the Karakoram Corridor: Implications and ProspectsM
ap
: K
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8 Expansion of the Karakoram Corridor: Implications and Prospects
if he advances at all’.7 It was because of this vulnerability
that for thousands of years, militaries on the southern side
of the K-H, guarded their mountain passes to safeguard
the continent as well as commercial sea-lanes, which
extended from Australia to Western Europe.
The colonial rulers feared that if Russians could access
India, they could take advantage of the land-routes,
connect with port facilities and divert the sea trade
overland to Europe. The Russian control over any such
alternative surface trade could have jeopardised monopoly
of West Europeans leading to the collapse of their empires.
No one, therefore, except the West Europeans could
understand the significance of the battles, fought over the
Karakoram passes in order to guard the open oceans,
which determined their domination of Asia as well as their
survival in Europe. It was this temptation, which brought
‘the great game’ to the mountain valleys of Gilgit-
Baltistan8, “where the long and jealously guarded frontiers
of India, China, (erstwhile) Russia, Afghanistan and
Pakistan meet” and the region has been characterised as:
the lynchpin, the pivot, the cockpit, “the hub, the crown’s-
nest and the fulcrum”,9 as well as “the axis of Asia” in
Chinese writings.10
7 M.G. Chitkara, Nuclear Pakistan, APH Publishing House, New
Delhi, 1996, p. 90
8 P. Hopkirk, The Great Game: The Struggle for Empire in Central Asia,
2001, p.358
9 See for a detailed acount of the strategic location of the region,
John Keay, The Gilgit Game: The Explorers of the Western Himalayas
1865-95, Oxford University Press, New York, 1994.
10 “Brief Introduction of Pakistan”, 2005, available on http://
english.cri.cn/2238/2005-4-6/[email protected]
9Expansion of the Karakoram Corridor: Implications and Prospects
China as the Post-modern Colonial Power
The Chinese eventually breached this mountainous “steel
wall” in 1978, a task which the mighty Mongols and
Russians failed to accomplish. But even more interesting
is the fact that instead of conquering lands for this
endeavour, China decided to befriend Pakistan; and built
KKH (initially connecting Kasghar in Xinjiang with
Havelian, located in the Abottabad district of Pakistan)
which was also called the “Friendship Highway”, to
achieve its strategic and economic goals in Afghanistan,
the Indian Oceanic Region (IOR), the Persian Gulf, the
Middle East and Africa. Similarly China has established
naval bases in the warm waters of the Indian Ocean and
has brought global trade overland to Central Asia;
something the Russians failed to accomplish.
Today, Pakistan and China are taking their strategic
relations to an even higher level by investing billions of
dollars in Gilgit- Baltistan to expand the Karakoram
Corridor and build an expressway, railway line and oil and
gas pipeline (OGP) through it. While this may reduce the
trade volume for China along the global sea-lanes and
significantly reduce the control of Western powers over
international commerce; it could also enhance the threat
perception among the neighbours, especially India which
claims Gilgit-Baltistan as its own. The region is
constitutionally a part of J&K, but has been under
Pakistan’s illegal occupation since 1947. In short, the post
modern great trade route game continues through the
corridors of Gilgit-Baltistan though traditional players like
Britain and Russia have been replaced by present day
powers like China, USA and India.
10 Expansion of the Karakoram Corridor: Implications and Prospects
Pakistan Linked to China’s WesternProvinces
When China completed the KKH, it termed the highway
a ‘strategic investment’,11 because it provided it with a
short and safe link through its western provinces to the
Arabian Sea. For this purpose, it constructed feeder roads
and linked its highway system with the KKH. For instance,
the feeder road built eastward through the Shaksgam,
Raskam and Shimshal Valleys (originally part of J&K),12
linked Gilgit with Hotan,13 which is an important military
base situated at the cross- section of Tibet-Xinjiang
Highway and the Hotan-Golmud Highway. The Hotan-
Golmud Highway links Xinjiang to Qinghai province and
central China. It reduces the distance between Gilgit and
Golmud to almost half, while bypassing the longer
Urumuqi-Kashgar Highway.14 Golmud – once a salty
11 Mahnaz Z. Ispahani, Roads and Rivals: The Political Uses of Access
in the Borderlands of Asia, Cornell University Press, Ithaca, N.Y.,
1989, p. 197
12 These valleys are under illegal Chinese occupation and belong to
Gilgit-Baltistan of J&K.
13 Maps of the Surveyor General of Pakistan show the roads linking
Gilgit with Xinjiang through Raskam. Mr. Vishnu Prasad of
ministry of external affairs of India complained to China for
building feeder roads in Shaksgam and Raskam which was
violative of the 1963 border agreement between China and
Pakistan.
14 Professor Wang Jianming of The Minority Group Development
Research Institute of Beijing stated on March 3, 2010 in an
international conference organised by Jawaharlal Nehru
University, New Delhi, that once the high-speed rail line between
Urumqi and Beijing is completed in 2011, distance between these
11Expansion of the Karakoram Corridor: Implications and Prospects
marshland– is currently one of the largest goods transit
points in western China; a strategic military HQ and the
national petrochemical base.15
Likewise, the feeder road stretching along the southern rim
of Xinjiang connects Gilgit with Aksai-chin and reduces the
distance between both regions by more than 800 miles.16
Such interventions have helped to connect military
complexes in West Tibet to Xinjiang and Pakistan.
KKH: The Long Arm of Pakistan
Road connectivity with China via the KKH also helps
safeguard political and strategic interests of Pakistan. It
runs through sensitive and disputed territories allowing
the militaries of Pakistan, India, Afghanistan, China and
USSR to converge within a striking distance. The
completion of KKH -to a great extent - relieved Pakistan
of the geo-strategic pressure it had been under since 1947.
two cities will take less than 12 hours to cover. Consequently it
will take less than 24 hours to reach Pakistani ports from central
China . He also stated that China was building up Xinjiang as a
‘bridgehead’ to Central Asia. Given China’s interests in Pakistan,
the KKH could well turn Xinjiang into a bridgehead for the
southern Asian region. See http://www.jnu.ac.in/
JNUNewsArchives/JNUNews_M ay_June10/conferences.htm
15 “Golmud City Set To Become China’s Salt Lake City”, “Alexander’s
Gas & Oil Connections, News and Trends: E& S.E. Asia, volume 7,
issue 15: August 8, 2002 available at http://www.gasandoil.com/
goc/news/nts23296.htm
16 Aksai-chin is Chinese occupied part of Ladakh (J&K); Isapahani
1989: 190, 202 & ff
12 Expansion of the Karakoram Corridor: Implications and Prospects
The highway enabled Pakistan to access Gilgit- Baltistan
and the north-eastern valleys of NWFP. It was a strategic
move to extend its internal communication and
transportation networks to these areas and exert physical
presence to counter the Indian claim over Gilgit-Baltistan,
and Afghanistan’s claim to NWFP. It helped Pakistan
thwart Soviet attacks; consolidate control over occupied
territories and its resources, as well as parts of NWFP
along PoK; sustain military trade with China; and integrate
the people of these regions with the Pakistani mainland.
With Chinese help, Pakistan expanded the network of
feeder roads and bridges17 in the strategic peripheral
valleys of Gilgit- Baltistan, which also included converting
pony tracks to jeep able roads in the villages along the
LoC.18 This not only helped Pakistan strengthen its military
bases near LoC but also increased the ability of its troops
to penetrate swiftly and deeply into Ladakh and the
Kashmir valley. Likewise, feeders along Qala Panja,
Mintaka and Wakhjir Passes provide a direct connection
between Gilgit-Baltistan and Afghanistan and Tajikistan.
Such connections were further strengthened when China
built concrete-base suspension bridges in 1996 in Gupis,
Yasin, Darel, Tangir and Shigar valleys. The Darel and
17 One such bridge linked Muzaffarabad and Uri with Pakistani
towns of Balakot and Mansehra and enabled Pakistani troops to
reach to forward military posts in AJK (Ispahani 1989: 192)
18 Professor Kondapalli while referring to Public Opinion Trends
(POT) magazine and China Report mentioned Chinese involvement
in the conversion of pony tracks to jeepable roads in Baltistan,
Astore and Muzaffarabad districts of J&K.
13Expansion of the Karakoram Corridor: Implications and Prospects
Tangir bridges link with the Indus right-bank road as an
alternate sustainable supply line to KKH, which is termed
as ‘world’s most attractive target for air interdiction’.19 The
bridges also directly connect Diamer and Ghizer districts
with Swat, thus bypassing sensitive choke points along the
Indus valley and Gilgit town. The bridges in Gupis and
Yasin link Pakistan with Tajikistan, and help counter
possible Afghan advances into Ghizer and Hunza districts
through the Wakhan corridor.20
At the same time, they provide alternate access to the
Chitral district, which remains cut off during the winter
months, and are accessible only through Afghanistan. The
Shigar Bridge provides an alternate supply line to Siachen
and Shaksgam sectors in Baltistan. The bridge helped
sustain Pakistani presence in the Nubra-Turtuk sector
during the Kargil War, when supply routes to Chorbat,
Saltoro, Masherbrum and Hushe valleys came under
intense Indian attack. Currently, China is also building a
concrete bridge near Bunji, which will replace the historical
Dogra era Maharaja Pratab Pul, and connect Bunji Dam
site, Astore and Baltistan with the main artery from
Srinagar to Gilgit. These structures are maintained and
upgraded by Pakistan’s Special Communications
19 Ispahani, n.12, pp.201-202
20 Chitral is part of J&K annexed by Pakistan and merged with
NWFP in 1975. It has all-weather road link with Afghanistan.
During the six months of winter, Chitralis have to travel to
Jalalabad, Afghanistan to approach Peshawar, capital of NWFP.
Owing to this vulnerability which could allow Afghanistan to
capture Chitral, Pakistan took the help of the Chinese to build
bridges and roads connecting the district with Gilgit-Baltistan in
the east.
14 Expansion of the Karakoram Corridor: Implications and Prospects
Organisation (SCO), Frontier Works Organisation (FWO),
and China’s Production and Construction Corps (PCCC).21
These organisations employ thousands, and more and
more Chinese workers continue to arrive to undertake
energy related projects.22 SCO maintains telecom and
telegraph services23 while Chinese telecom companies like
Huawei,24 Zong and ZTE provide uninterrupted coverage
21 PCC is responsible for construction in Xinjiang as well as Gilgit-
Baltistan. Although formally detached from PLA in 1985,
involvement of PLA officials in the operation of the corps
continues.
22 Some local politicians belonging to Balawaristan National Front
(BNF) and Karakoram National Movement (KNM) claim that up
to 10,000 Pakistani and 5,000 Chinese soldiers are currently
present in Gilgit- Baltistan to maintain KKH, extract mineral
resources and build energy-related mega projects. Dr Shabbir
Chaudary of Kashmir National Party visited Gilgit-Baltistan in
March 2009 and testified to the presence of Chinese soldiers who
belong to Production and Construction Corps, earlier a part of
PLA, In Abdul Hamid Khan, Chairman , Balwaristan National
Front’s appeal letter to Javier Solana, Secretary-General of the
Council of the European Union , dated 19th August, 2009, available
on http://www.gwank.org/August09/Chinas_Occupation_
Balawaristan20090820.html
23 “China and Pakistan Bilateral Economic And Trade Relations,
published May 21, 2009 available on http://pk2.mofcom.gov.cn/
a a r t i c l e / b i l a t e r a l c o o p e r a t i o n / i n b r i e f / 2 0 0 9 0 5 /
20090506267003.html
24 Huawei provides a range of equipment and services including
fixed and switch network, mobile network, data communications,
optical network, software and terminals, R&D services, modems,
integrated access network, NGN, XDSL, optical transport,
intelligent network, GSM, GPRS, EDGE, W-CDMA, CDMA2000,
a full series of routers and other LAN equipment and also
manufactures mobile phones.
15Expansion of the Karakoram Corridor: Implications and Prospects
to Gilgit- Baltistan including major towns along the KKH,
which improves connectivity and surveillance capabilities.
The Jihad-way
Highway diplomacy, which is the most striking feature of
China’s trade route strategy, enables both China and
Pakistan to use the KKH to contain the growing political
and economic influence of their adversaries.25 For instance,
China and USA established listening posts in Gilgit-
Baltistan and used the KKH to transfer military supplies
and manpower from Xinjiang to the Afghan mujahideen
to sustain the Afghan-Soviet War during the early and
mid-1980s.26 China also used KKH to transport its nationals
(from Xinjiang province) to PoK to join the jihadi training
camps during the Afghan jihad.27 There were also Chinese
25 Ispahani, op cit, p.197; China describes the road as ‘strategic
investment’, and trade via KKH as ‘merely symbolic operation’.
26 Fazal-Ur-Rahman, “ Pakistan’s Evolving Relations with China,
Russia, and Central Asia” Acta Slavica Iaponica, No. 16, Slavic
Research Center (SRC), Sapporo , Japan, 2007, pp. 213-214. The
chapter is available at http://src- h.slav.hokudai.ac.jp/coe21/
publish/no16_1_ses/11_rahman.pdf.
27 See Congressional Research Service Report, 17 December 2001;
http://www.uyghuramerican.org/statements/letter-to-
colin.html; Soviet-backed government in Kabul claimed that China
funded Afghan Mujahideen with US$400 million worth of
weapons; 300 military advisors and trainers residing in camps at
PoK including Gilgit- Baltistan, and Xinjiang. It is said that more
than 55,000 fighters received training in camps in Pakistan many
of which existed in Gilgit-Baltistan and Chitral.
16 Expansion of the Karakoram Corridor: Implications and Prospects
instructors providing training to the mujahideen.28
According to recent estimates by the locals, there are about
5,000 Chinese (as per local calculations) Uyighur rebels
living in Pakistan and PoK. The Soviets termed the KKH
as the ‘principal artery for the flow of Chinese weapons
to the insurgents’. They even planned to attack Gilgit-
Baltistan to firstly, interdict KKH; secondly to destroy
Afghan training camps and bases; and thirdly to deny
China access to Pakistan which was directly involved in
helping the mujahideen.29 The policy, which was touted as
China’s ‘highway bogey’,30 helped both countries contain
their adversary, the USSR, from expanding its political
influence in South Asia, and also promoted their own
strategic and political interests in Afghanistan. At the same
time, it allowed China to gain the trust of the Americans
and win the minds and hearts of Arab leaders.31 The same
highway later assisted China to export military hardware
to the Taliban and increase its political leverage.32
28 In the mid-1980s, there were more than 300 Chinese instructors
and advisors stationed in PoK providing training to the
Mujahideen. See the interesting Map on CIA operations on page
no vii, in John Cooley, Unholy Wars: Afghanistan, America, and
International Terrorism, Pluto Press, Sterling, Va., 2002, p 59.
29 Rizwan Hussain, , Pakistan and the emergence of Islamic militancy
in Afghanistan, Ashgate, Aldershot, 2005, p. 102.
30 Ispahani, n.12, p.192.
31 China provided military supplies worth $200 million annually to
the Afghan Mujahideen. op. cit (n. 26).
32 Far East & Australasia Regional Survey of the World 2003, Routledge,
2004, p. 73
17Expansion of the Karakoram Corridor: Implications and Prospects
Such interventions converted Gilgit-Baltistan into a virtual
war zone and brought instability to the region. Up until
the end of Afghan war, the people of Gilgit-Baltistan lived
in fear of Russian attacks as well as Chinese military
advances.
Low-cost Deterrent to India
The interdependency which both nations achieved through
the Karakoram corridor allowed China to use Pakistan as
her security front and as a low-cost but high- efficiency
deterrent against India’s growing political and economic
clout.33 The 1966 Sino-Pak accord enabled Pakistan to
access Chinese weapons through the KKH.34 Chinese
military contributions have helped Pakistan sustain its
wars on the eastern front and continue a low intensity
conflict along the LoC.35 According to Press Trust of India
(PTI), Tass and Pravda, China used the KKH as a secret
corridor for arms smuggling,36 which enhanced its military
strength along the Indian border, and enabled it to station
specialists in PoK, perhaps to keep a close eye on the
33 Jamal Afridi and Jayshree Bajoria, ”China And Pakistan
Relations”, July 6 2010 available on http://www.cfr.org/
publication/10070/chinapakistan_r elations.html
34 Ispahani, n. 11, p.199; Chines Deputy PM, Li Xiannian, upon
completion of KKH, said, ‘KKH allows us to give military aid to
Pakistan’.
35 Ibid., p.187; Starr 2004:143
36 Ibid., p.200; In 1971, KKH was used to ferry military supplies to
Pakistan from China. During the 1971 war, a section of KKH was
closed for foreigners by orders of President Yahya Khan to conceal
clandestine activities on the KKH.
18 Expansion of the Karakoram Corridor: Implications and Prospects
developments in the region as a whole and Indian state
of J&K in particular.37 Further, Chinese personnel also
trained the Gilgit Scouts to fight in the Ladakh sector. As
a quid pro quo, Pakistan used KKH to supply high-tech
weapons38 including unexploded American missiles from
the Afghan jihad theatre to China for reverse engineering.39
The USA relaxed relations with Pakistan following the
Afghan Jihad and even imposed sanctions on it, suspicious
of its clandestine effort to build nuclear weapons. During
this time, China continued to be the primary source for
Pakistan’s military procurements. It is believed that arms
supplies via the KKH have continued even in recent years.
According to Professor Kondapalli of Jawaharlal Nehru
University, Indian sources monitored and detected the
movement of transport erector launchers (TELs) carrying
missile barrels on the KKH in 2005.40 In fact, China has not
ratified the border arms reduction treaty and the mutual
reduction of military forces and disarmament on the
border treaty with Pakistan, which it signed with its other
37 In 1978, Tass called KKH ‘the road of danger’. Similar comments
came from Kabul New Times in 1982 (Ispahani, n.11, p.192)
38 Ispahani (n.11, p.199.) says China received sophisticated Western
weapons from Pakistan through KKH. Chinese foreign ministry
official described the ties between the countries as: China’s
military relationship with Pakistan is one of the closest since we
are very good friends we have helped to build their defence.
39 Bhasker Roy, “China, Pakistan And Musharraf”, Paper no. 2575,
January 31, 2008, available at http://www.southasiaanalysis.org/
%5Cpapers26%5Cpa per2575.html
40 Interview on February 9, 2009 at JNU Delhi
19Expansion of the Karakoram Corridor: Implications and Prospects
neighbours.41 This policy allows them to continue military
supplies via the KKH. The continued use of KKH for
exchange of military hardware between China and
Pakistan will make India suspicious of the growing nexus
between the two countries. In this context, Chinese
presence in Gilgit-Baltistan, which India claims as its own
is certain to make India anxious and lead to regional
instability.
How the Locals View KKH
There are reasons to infer that though the KKH was
ostensibly built to ensure development of the region by
enhancing local trade, it has largely failed to do so.42 The
so-called deep state (the military establishment) in Pakistan
has used the region for strategic purposes and has not paid
any heed to the needs of the local people. Socio-economic
statistics of the region show that the locals have not
benefited despite the ongoing bi-lateral ‘border’ trade since
the 1970s. For instance, the per capita per annum income
of Gilgit-Baltistan is only one-fourth of Pakistan’s national
average and more than half 1.3 million of its inhabitants
still live below the poverty line.43 Further, the literacy rate
also remains very low at 15 per cent for males and 5 per
41 “Mutual Reduction Of Military Forces In The Border Area”
available on http://www.fas.org/nuke/control/mrmfba/
index.html
42 Ispahani, n.11, pp.188-195
43 “Socioeconomic Study of Northern Areas and Chitral (SESNAC)
Report of AKRSP”, 2007.
20 Expansion of the Karakoram Corridor: Implications and Prospects
cent for females.44 Likewise, the energy consumption rate
of the locals is almost ten times lower (5 watts per capita)
compared to Pakistan’s national per capita average of 48
watts.45 In 1996, many business experts pinned their hopes
on Pakistan, China, Kyrgyzstan and Kazakhstan, after they
ratified their inter- governmental agreement on trade,
transit and transportation46 However, Pakistan still ranks
sixth and last among the trading partners of Xinjiang.47
Despite the existence of Preferential Trade Agreement,
Free Trade Agreement and Early Harvest Programme on
goods (signed in
2007), investments (signed in 2008) and services (signed
in 2009), locals have failed to derive the expected benefits.
When Sino-Pak trade reached the $7 billion mark in 2009,
the share of trade via KKH was a miniscule 4 per cent, and
more surprisingly, while the Chinese share was a
staggering 83 per cent of the total bilateral exports.
44 World Bank estimates of 1997; no official literacy census has been
undertaken over the last 12 years. An overwhelming majority of
the local children go to private schools established by NGOs,
which receive funds from Western and Middle Eastern countries.
45 Abbas Ali, ”Awakening of Gilgit-Baltistan( A response to N
Khattak)”, Op-Ed, Pamir Times, September 11, 2008 available on
http://pamirtimes.net/2008/09/11/op-ed- awakening-of-gilgit-
baltistan-a-response-to-n-n-khattak/
46 “First Pakistan Container Reaches Almaty Via Karakoram
Highway”, December 7 2006 available on http://
www.encyclopedia.com/doc/1G1-155626531.html
47 “China Xinjiang Reports Robust Foreign Trade Growth”, APP,
August 18, 2008 available on http://pk2.mofcom.gov.cn/aarticle/
chinanews/200808/20080805736308.html
21Expansion of the Karakoram Corridor: Implications and Prospects
According to local respondents, Pakistan does not share
transit revenues accruing from KKH, and income from the
dry- port with the regional administration.48
Further, the staff at the custom check point, Khunjerab
Pass, FWO, SCO, and even the security guards for the
Chinese workers mainly come from Pakistan.
According to the local population, while cheap synthetic
Chinese products somehow address the short-term needs
of poor people, they have adversely affected the local
cottage industry. Further, transit and trade is mainly
controlled by the Pakistanis and the Hans49 and the
products exchanged do not benefit local manufacturers
and producers50 (Annexure II). Likewise, most of the
China- product stores are owned and run by Pakistanis.51
It is also claimed that military’s National Logistics Cell has
exclusive right to handle freight traffic via KKH, thus
48 Gilgit-Baltistan Chief Executive and Chairman of the dry port Mir
Ghazanfar Ali Khan admits that the region does not receive any
share of the income of the dry port. In 2009, he proposed that a 3
per cent share of the income of the dry port be spent on the
development of Gilgit- Baltistan.
49 Author interviewed traders of Hassan Khan market, Gilgit on
October 29, 2006
50 Haroon Rashid, “ ”, http://www.bbc.co.uk/urdu/
pakistan/story/2005/09/050925_gilgit_china_fz.shtml
51 In Skardo, there are around 15 shops which sell Chinese imported
products and more than 70 per cent of them are operated by
Pakistanis.
22 Expansion of the Karakoram Corridor: Implications and Prospects
depriving the locals of the revenue from the cross-border
transportation service.52
Many people interviewed by the author complained that
the road connectivity has largely been used to transport
troops to convert Gilgit-Baltistan into a military garrison
and support wars; to establish listening posts; and to
control the local people. Although Chinese and Pakistani
officials blame the separatists in their respective occupied
regions for low trade volumes,53 the above statistics
reinforce the local opinion that the KKH has so far served
the larger interests of regional connectivity for Pakistan
and China rather than increasing opportunities for local
livelihoods. It still remains to be seen whether the further
expansion of the corridor will bring any substantial and
tangible benefits for the local people.
Future Expansion of KKH
The KKH expansion project is China’s brainchild and an
initiative of ex-President of Pakistan, General Pervez
Musharraf. The ambitious plan, for improving the cross-
regional transportation and commercial network among
the client states, will convert KKH into a 90-feet wide
expressway for a threefold increase in the existing capacity.
The expansion and re-alignment will allow speed with
safety and cost reduction by accommodating heavy-laden
trailers under extreme climatic conditions (Annexure III).
52 Vikram Sood, “Border line Case”, Hindustan Times, June 7, 2007.
53 Author’s interviewed with a Pakistani customs official on
November 2, 2009, Islamabad
23Expansion of the Karakoram Corridor: Implications and Prospects
The corridor development project will cost $6 billion and
will link Central Asia and China to the Asian highway
network, passing through Afghanistan and Iran.54 Further,
a 1,100 km long rail-link worth costing $10.237 billion will
also be laid, which will cut the distance between Pakistan’s
capital Islamabad and China’s trade centre Kashgar to a
mere seventeen hours. In addition, oil and gas pipelines
(OGP) will also run across the corridor55 linking the
existing fuel-lanes of Central Asia and China to refineries
on Pakistani ports, and the Middle East.56 In essence, the
conduit will facilitate a range of world class transport
services such as freight management, trucking, modern
dry-port infrastructure, an efficient logistical chain,
54 While the programme is still under implementation, trans-regional
trade has already started through the KKH when a Pakistani
company ‘Pak Caspian Trade Link’ supplied a container to
Almaty in 2005.
55 Considerable Progress with the extension of regional railways”,
Statement by Afghanistan’s Minister of Foreign Affairs at 19th
Session of the ECO Council of Ministers In Istanbul on 22nd
December 2010, available on http://www.andrewgrantham.co.
uk/afghanistan/tag/c hina/
56 “China interested in Trans Himalayan Oil Pipeline”, October 24,
2006, available at: http://pk2.mofcom.gov.cn/aarticle/
chinanews/200610/20061003508868.html; Musharraf reportedly
said, ‘KKH is the eighth wonder of the world and we created it.
We are also capable of creating ninth and tenth wonders of the
world in the form of railway and OGP linkages between Pakistan
and China’. The entire speech is available at: http://
presidentmusharraf.wordpress.com/2006/07/05/apns-award-
ceremony-2006/.
24 Expansion of the Karakoram Corridor: Implications and Prospects
customs clearance and border terminals, which will lead
to a quantum leap in regional trade.57
The corridor is expected to serve the economic needs of
both countries with an eye on advancing their strategic
interests in the Gulf.
The Special Feature of Karakoram
Corridor Development Plan is construction of 19 tunnels,
which will be dug out on the road- stretch between Hunza
and Khunjerab Pass. The construction staffs for this patch
are composed entirely of Chinese nationals. Gilgit-
Baltistan is highly suitable as a storage base for high-value
military weapons like missiles and tunnels enhance such
capability. Among them, one major tunnel will pass under
the infamous Khunjerab Pass, which is also known as the
gateway to India, or China’s Khyber Pass. Called the
Friendship Tunnel, the Chinese claim it as a significant
milestone in the Sino- Pak relations, which will provide all-
weather access to revolutionize inter-regional travel and
freight carriage.58
57 See the presentation by Dr. Asad Ali Shah, Member
(Infrastructure), Planning Commission, Government Of Pakistan,
in Manila, “Pakistan’s National Trade Corridor Program”,
available at http://www.carecinstitute.org/uploads/events/
2007/S OM-Sep/PAK-National-Trade-Corridor-Program.pdf
58 “Pak-China Tunnel at Khunjerab”, available on http://blog.travel-
culture.com/2008/12/01/pak-china- tunnel-at-khunjerab/
25Expansion of the Karakoram Corridor: Implications and Prospects
Karakoram Corridor (KC): EconomicProspects for Pakistan
Pakistan’s objective is to make the corridor economically
viable and offer it for international trade and transit on a
mass scale. This will not only help the country’s economic
growth but also enhance its political and strategic leverage
vis-a-vis other countries in the region. The transit system
will increase commodity exchange between all regional
countries including Russia and Eastern Europe translating
into significant amounts of transit fee for Pakistan. While
Pakistan will achieve energy security, it may help Central
Asia and Xinjiang overcome food shortages. It will also
enhance tourism and people to people contact among the
nations. In the end, it is not just about trade and transit of
fossil fuels and minerals among the producers and
consumers; it is also about securing KC as an alternate
sustainable route reducing dependence on Afghanistan.
China also prefers the transit to the Gulf through Pakistan
over Afghanistan and Central Asia, to avoid negotiations
with multiple countries and save transit fees. To
accommodate increasing trade volumes, China is
upgrading the dry-port at Sost from existing handling
capacity of 40 containers per day to 400. The countries will
also issue visa on arrival to encourage travel and tourism.59
If all goes as per plans, then by 2030, Pakistan expects to
earn heavily from such trade. The success of Pakistan’s
59 “Pakistan Considers Relaxing Visa Facilities For Chinese
Tourists”, June 22, 2006 available on http://pk2.mofcom.gov.cn/
aarticle/chinanews/200606/20060602501358.html
26 Expansion of the Karakoram Corridor: Implications and Prospects
ambitious economic plans depends on the volume of trade
passing through KC as well as the political situation in
Afghanistan, which for the time being remains volatile.
The prospect of gaining access to Central Asia’s oil, gas
and mineral resources is the main reason for an energy-
hungry nation like Pakistan to speedily complete the
project. Central Asia has proven gas reserves of 236 trillion
cubic feet and oil reserves of 200 billion barrels. While
Turkmen-Kazakh-China pipelines are in place, their
extension to Pakistan through the Karakoram Corridor
appears to be an early possibility. Future Russian60 and
Italian61 OGP ventures in Kazakhstan and China will add
to the prospects of Karakoram Corridor.62 Likewise,
possible uranium and gas imports from Uzbekistan, and
Hydel energy from Tajikistan and Kyrgyzstan63 will make
KC a reliable corridor to boost Pakistan’s economy further.
60 James Topham and Judy Hua, “Russian ESPO Blend crude set to
come to Asia”, , Reuters Fact Box, December 23, 2009. http://
in.reuters.com/article/2009/12/23/crude-espo- russia-
idINTOE5BK09K20091223
61 The ENI currently holds 22 exploration and production licenses
in Pakistan. The ENI aims to bring gas from Turkmenistan,
Kazakhstan to China, Pakistan and India; http://
www.dailytimes.com.pk/default.asp?page=2009%5C10%5C01%5
Cstory_1-10-2009_pg7_1
62 Safdar Khan, “Karakoram Highway’s Gwadar link likely”, July
05, 2006, at http://archives.dawn.com/2006/07/05/top1.htm.
Half of Russian oil exports to China come through the Kazakh
pipeline, so Turkmen, Kazakh and Russian oil and gas can be
extended south and south-east via Gilgit-Baltistan. Russia agreed
to build the trans-Siberian oil pipeline and two gas pipelines when
Putin visited China last March.
27Expansion of the Karakoram Corridor: Implications and Prospects
In the end, the success of KC to fulfil domestic energy
needs also depends on how Pakistan optimises its strategic
relations with the Central Asian countries.
Since the current Chinese investment in Pakistan has
reached tens of billions of dollars compared with a meagre
$550 million in 2006, it is imperative for Pakistan to not
only maintain this land connectivity but also expand its
scope to meet China’s needs. China considers these
investments strategic and a way to revive Pakistan’s
economy and save it from becoming a failed state.
Pakistan’s survival is a key to Chinese dominance and
influence in South Asia and in the Muslim world. Land
connectivity also enables it to transport heavy machinery,
equipment, and additional workers to Pakistan. Currently,
more than 60 Chinese public and private sector companies
and 10,000 skilled workforce are working on over 250
projects in PoK and Pakistan (Annexure IV & V). The
gestation period of many of these mega projects is long
and so is Chinese presence. At the same time, given the
demographic sensitivities, using the overland route via
Pakistan will enable China to consolidate its control and
sustain its economic interventions in its western provinces.
KC Securing Chinese Economic Interests
Even during the worst of the global recession, China
continued to buy and secure billions of dollars worth of
fossil fuels and mineral resources. Even more impressive
63 Agreements to import hydel power from Tajikistan and
Kyrgyzstan were signed in 1992; Rizwan Hussain op cit, p.181
28 Expansion of the Karakoram Corridor: Implications and Prospects
is its resolve to achieve it without the use of military, and
without the support or reliance on the Western powers.
In essence, it shows China’s growing diplomatic and
economic muscle as well as its strategic success. It is
believed that if China can lay its hands on the targeted
resources, then it can sustain its economic growth and
maintain its international stature as a great power. China’s
intended investment of $730 billion in the transport sector
in west China64 and $88 billion in Xinjiang65 will mean a
huge increase in traffic flow and fuel consumption. This
is in addition to what China currently consumes for
domestic purposes, industrial development, exports and
infrastructure build-up.66 China which is the world’s
second largest oil consumer currently imports more than
half the oil it uses.67 It is also world’s largest copper
importer. It gets almost half of its oil needs from the Gulf68
64 “Unlocking Africa’s Promise: China & African Mining”, The China
Monitor, Issue 35, November 2008, available on http://
www.ccs.org.za/downloads/China_Monitor_20_%20November_
2008.pdf
65 By 2050, China plans to add 4 million kilometers of road network.
In 2009, China ranked first as global car importer http://
german.china.org.cn/english/China/46456.htm.
66 Given the magnitude of needs, Beijing plans to invest US$150
billion on developing global energy resources in the next 15 years.
67 Although energy-hungry China is world’s fifth-largest oil
producer at 3.7 mbpd, it still imports more than 50 per cent of its
oil needs.
68 “ Kazakhstan-China Oil Pipeline Opens to Commercial operation,
China council for the Promotion of International Trade, China
Chamber Of International Commerce, Economic & Trade News,
July 2006, available on http://english.ccpit.org/Contents/
Channel_411/2006/0712/2965/content_2965.htm
29Expansion of the Karakoram Corridor: Implications and Prospects
and another 30 per cent from Africa.69 Xia Yishan, a
researcher with CIIS70 says that China is strategically
transforming Africa into an independent and exclusive oil
source.71 It is investing heavily in oil, gas and minerals to
secure her future needs.72 For instance, it has become
Africa’s second largest trade partner73 with volumes
reaching $107 billion in 2008.74 In Iran, which is China’s
second largest oil supplier, investment has surpassed $125
In 2008, China’s crude oil import totalled 127 million tons, about
40 per cent of its total consumption. About a half of China’s oil
import came from the Middle East, said Pan Derun, deputy
chairman of the China Enditem.
According to the article, China’s Energy Quest and the Indian
Ocean, 80 per cent of China-bound oil and liquid natural gas
passes through the Indian Ocean.
69 Cindy Hurst, “China’s Oil Rush In Africa”, IAGS Energy Security,
July 2006, available at: http://www.iags.org/chinainafrica.pdf
70 Wu Zhong, “China Aims to Diversify Oil Sources”, Asia Times,
February 28, 2007 available on http://www.atimes.com/atimes/
China_Business/IB28C b02.html
71 When India won the Angola oil contract, China entered at the last
minute, offered incentives worth US$2.2 billion, compared to
US$200 million of India, in social sector development and clinched
the deal.
72 International Energy Agency (IEA) estimates that by 2015, China
will be consuming 11.3 mbpd
73 Stephanie Hanson, “China, Africa and Oil”, June 6, 2008 available
on http://www.cfr.org/publication/9557/
74 James Macharia, “China to Fuel Africa Mining Growth Despite
Crisis”, Mail&Guardian Online, February 12, 2009 available on
http://www.mg.co.za/article/2009-02-12- china-to-fuel-africa-
mining-growth-despite-crisis
30 Expansion of the Karakoram Corridor: Implications and Prospects
billion, taking the bi-lateral oil trade to $27 billion. The
recent $3 billion oil contract with Iraq will further increase
Chinese dependence on the Middle Eastern oil.
In view of its close association with Africa and the Middle
East, and the proximity of Pakistani ports to the energy
hubs, China’s interest in developing KC as a future
primary oil supply line is obvious.75 However, the
usefulness of KC for China is coupled with its ability to
transport the required quantity of fuel-supplies from
Pakistani ports to Xinjiang.76
The expansion of the rail network connecting Pakistan
with Iran and Afghanistan will also boost these prospects.
While, it may take some years for the overland route to
become economically viable; it will continue to serve China
as an additional supply line. Given the length of the sea
route and narrowness of the Malacca Strait, which carries
80 per cent of China’s oil imports, safety around the choke
points always remains a challenge.
The KC will therefore decrease Chinese vulnerability to
closure, disruption or interdiction of Malacca Strait and
South China Sea.77 On the other hand, the Gwadar-KC
75 Stephen Blank, “China Hangs fire on Iran-Pakistan pipeline”, Asia
Times, March 9,2010 available on http://www.atimes.com/
atimes/China_Business/LC09Cb01.html
76 China’s access to Afghanistan and Iran will not involve Pakistani
ports after completion of the over land route through KC
77 The Strait of Malacca at its narrowest is only 2.8km wide. The
United States’ control over the Malacca Strait has contributed
enormously to Beijing’s fears that Washington could choke off its
oil supply, in the event of hostilities over Taiwan; http://
pakobserver.net/200906/28/Articles03.asp
31Expansion of the Karakoram Corridor: Implications and Prospects
combination also guarantees a logistical advantage by
significantly reducing the distance of 16,000 km to a mere
2,500 km between Chinese industrial areas and the Gulf.78
Similarly, Kashgar, which is 3,500 km away from the
Chinese east shore, is now less than 1,500 km from
Pakistani ports near the Strait of Hormuz. The high-speed
Urumqi- Beijing rail link (LanXin-II) that will take only 11
hours between the eastern and western most extremities
of China will be complete in 2011.79 With that, time to
commute from central and eastern China to the Pakistani
ports will be a few hours only. Using KC as an alternate
supply line will increase China’s ability to stockpile oil
reserves to offset future shortages or any blockade of oil
resources. Reliance on Pakistan for additional ports and
interlinked overland routes becomes crucial in the wake
of Chinese ports getting clogged due to excessive usage.
In this context, China is improving the holding capacity
of Gwadar port to 100,000 dead weight tonnage (dwt) of
dry cargo and 200,000 dwt of oil tankers,80 to meet its
needs. These statistics help understand why Pakistani
ports and KC are the lynchpin that ensures China’s long-
term economic sustainability.
78 Comments by John Vautrain, Senior Vice President of Purvin &
Gertz Inc.
79 W. Jianming, ‘China’s Western Development Programme in
Xinjiang (2000-2009)’, 2010, (Unpublished Dissertation), Centre for
South, Central and Southeast Asian Studies, School of
International Studies, JNU, New Delhi, India p.2.
80 This will allow a full-weight cargo or oil-tanker to arrive at
Gwadar, since capacity of Hormuz itself is no more than 150,000
dwt.
32 Expansion of the Karakoram Corridor: Implications and Prospects
Strengthening China’s Security
China’s economic, political and security interests are
interlinked. Linking Gwadar and Ormara ports overland
to Chinese western provinces makes gives it foolproof
security. Without short and safe overland connection to the
ports, China will find its security interests compromised
since it lacks blue-water naval capacity and aircraft carriers
in the Gulf. With almost half of its oil imports passing
through the Strait of Hormuz, China is conscious of the
need to enhance its political and military influence in the
region.81 Currently the Chinese navy has access to
Pakistan’s Ormara and Gwadar naval bases, which would
help it in guarding its oil supplies; as well as serving as a
security umbrella to countries like Iran to enhance political
and strategic leverage.
In addition, the proposed rail link will enable the transport
of Chinese supplies to Pakistani ports. Maintaining control
over KC will also help China maintain its control over
Shaksgam and the neighbouring valleys, which otherwise
may create choke points along the historical silk route and
threaten Chinese control of Xinjiang. At the same time,
overland access to Iran and Afghanistan from Pakistan will
help reduce threat perceptions arising from the Indian and
81 A recent report titled “Energy Futures in Asia” produced by
defence contractor Booz Allen Hamilton for Pentagon notes that
China has already set up electronic eavesdropping posts at
Gwadar, which are monitoring maritime traffic through the Strait
of Hormuz and the Arabian Sea.
33Expansion of the Karakoram Corridor: Implications and Prospects
American presence in the Gulf.82 By approaching
Afghanistan through Gilgit-Baltistan rather than Central
Asia, China will benefit by avoiding competition with
Russia for strategic depth in what Russia considers its near
abroad.83
KC and its Political Implications forNeighbours
China and Pakistan are undertaking infrastructure projects
in Gilgit-Baltistan, a region legally claimed by India. While
China admits that solving J&K dispute will bring stability
to the region, its increasing involvement in PoK is making
the issue more complex and prolonging the dispute.84 The
feeder roads built through Shaksgam and Raskam help
consolidate China’s control over these occupied valleys.
India considers such advances illegal and a challenge to
its sovereignty. At the same time, China and Pakistan
consider their 1963 border settlement as final. China
recently announced the establishment of a consulate in
Gilgit, confirming its support to Pakistan’s stance on
82 So far, Chinese investments in Afghanistan amount to $4 billion,
mainly in copper mining in Aynak district of eastern Afghanistan
as well as some other road projects.
83 Adrien Mong, “Resource Hungry China Heads to Afghanistan”,
October 14, 2009, available on http://worldblog.msnbc.msn.com/
archive/2009/10/14/2098654.aspx
84 K.S. Shelvankar, “China’s Himalayan Frontiers”, International
Affairs, Vol. 8, No 4, October 1962, p. 478
34 Expansion of the Karakoram Corridor: Implications and Prospects
Gilgit-Baltistan.85 Chinese media also advances similar
notions by using the terms like Pakistan held Kashmir for
Muzaffarabad and ‘the northern areas of Pakistan’ for
Gilgit- Baltistan.86
Professor Wang Jianming of Minority Groups
Development Research Institute of Beijing stated that
Chinese government considers Gilgit-Baltistan ‘the
northern province of Pakistan’.87 As a reciprocal gesture,
Pakistan accepts China’s control over Shaksgam and
Raskam valleys88 and also acknowledges China’s claim
over Aksai-chin.89
Such violations have compromised peaceful negotiations
over the J&K issue. Chinese road network through
Shaksgam which also links KKH with Tibet-Xinjiang
Highway has led to encirclement of J&K from three
85 “Chinese Consulate being established in Gilgit”, Pamir Times,
January 27, 2008, available on http://pamirtimes.net/2008/01/
27/chinese-consulate- being-established-in-gilgit/
86 http://english.cri.cn/2238/2005-4-6/[email protected]
87 Conversation with the author held in Delhi during a conference
on Xinjiang on March 4, 2010
88 The foreign ministry spokesperson of China commented on the
article 6 of the 1963 Sino-Pak ‘border’ agreement confirming that
the deal is final and there is no need to re-open negotiations on
the agreement. Srikanth Kondapalli, World Focus January 2007 pp
26-31.
89 Pakistani maps show Aksai-chin not demarcated land, enabling
China to negotiate if and when Pakistan acquires sovereignty over
J&K
35Expansion of the Karakoram Corridor: Implications and Prospects
directions90 providing an opportunity for China and
Pakistan to launch pincer movements. Chinese experts
have talked about a pincer movement in the context of
Chicken’s Neck in north eastern India.91 But given Sino-
Pak military agreements and their collaboration during the
1965, 1971 and 1999 wars, such a scenario is very much in
the realm of possibility in the Karakoram sector.
The possibility of a pincer movement can be seen in the
context of the Sino-Pak ‘friendship, cooperation and good
neighbourly relations’ and ‘combating terrorism,
separatism and extremism’ agreements signed on April 5,
2005 and January 4, 2006. Professor Yu Dunxin of ICIR,
China says that ‘the treaty binds both countries to work
as allies against any foreign threat’.92 The treaties also
prevent them from ‘joining any alliance or bloc which
infringes upon the sovereignty, security and territorial
integrity of the other side’.93 It also forbids the signatories
from entering into similar treaties with another country.
90 On June 26, 1969, Indian government spokesperson said in New
Delhi that the new road was a militarily sinister move directed
against India and would enable China to move troops from Tibet
and Ladakh to Gilgit, directly cutting the distance from 1,000 to
200 miles.
91 Thin stretch of West Bengal and Sikkim that is sandwiched
between China, Nepal and Bangladesh is called India’s chicken’s
neck.
92 Associated Press of Pakistan, November 22, 2006
93 D.S. Rajan, “China: Revisiting the 2005 Friendship Treaty with
Pakistan”, available at http://www.southasiaanalysis.org/
%5Cpapers21%5Cpa per2058.html
36 Expansion of the Karakoram Corridor: Implications and Prospects
Chinese President Hu Jintao described the Sino-Pak
friendship treaty as one providing ‘an important legal
foundation for bi-lateral strategic partnership’ during his
visit to Pakistan on November 23-26, 2006. However, since
Gilgit-Baltistan is flanked by Ladakh (India), and
Afghanistan, which has strong ties with India, Pakistan
will be careful about allowing its land to be used to pursue
such military adventures. In the context of above-
mentioned treaties, China may interlink Indo- China
border settlement issues with India’s policy on Gilgit-
Baltistan. For instance, China may demand Indian
guarantees of non- aggression towards Gilgit-Baltistan,
especially over the interdiction of KC, before agreeing to
talks on Indo-China disputes in western and eastern
sectors.94
94 H.E. Luo Zhaohui, “Address on the Inauguration of Upgradation
of the Karakoram Highway”, at the Jinnah Convention Centre,
on February 16, 2008. Chinese Ambassador to Pakistan said that
“the KKH is not only a road linking our two peoples with trade
and interaction, but also a great monument, a great symbol of the
close relationship between our two countries. The best way to
memorise these heroes - Chinese engineers sacrificed their lives
for the construction of the KKH - is to strengthen our friendship,
deepen our cooperation, and to take good care of the KKH. We
will not allow the KKH to be damaged, as we will never allow
the Sino-Pak friendship to be damaged. Our relations are based
on four pillars, i.e. trade and economic cooperation, defence
linkage, people-to-people contact, as well as coordination in
regional and global issues. I am 100 per cent sure that, with the
up-gradation of the KKH and with the implementation of the
Sino-Pak Trade Corridor Programme, our linkage will be more
strengthened. Available at http://pk.chineseembassy.org/eng/
zbgx/t414855.htm;
37Expansion of the Karakoram Corridor: Implications and Prospects
Some analysts see Chinese projects as part of its plans to
encircle India. KC will provide advanced logistical support
to access areas along the Indian border, which are dotted
with China-specific special economic and industrial zones.
Places like Hunza, Gilgit, Diamer, Astore, Skardo,
Kishanganga, Muzaffarabad, Mirpur, Lahore, Faisalabad,
Kalashah Kaku, Tharparkar and Karachi have a strong
Chinese presence.95 Further, the presence of 10,000 Chinese
workers in Pakistan, whose number continues to grow, is
also a concern for India. These interventions are seen by
adversaries as strategic investments in the guise of
economic support. By increasing its influence on India’s
western border, China wants to divert India’s attention
towards the region and keep her engaged in yet another
strategic front.
China’s permanent naval presence at the narrow entrance
of the Persian Gulf is a concern for India which receives
more than 70 per cent of its oil through the Strait of
Hormuz. Admiral Suresh Mehta96 says that the overland
95 Rizwan Hussain, op cit., p.234; China has access to the Skardo
airbase in Baltistan, which hosted Chinese trainers during the
Kargil War to assist Pakistani air force. According to Professor S.
Kondapalli of JNU, Hindustan Times carried the news that Chinese
air force personnel performed their duties at Skardo air field in
conjunction with Pakistani pilots to thwart a possible Indian air
attack during the Kargil War.
96 Former Indian Naval Chief, Admiral Sureesh Mehta said in March
2009, that the Gwadar port had “serious strategic implications for
India...Being only 180 nautical miles from the exit of the Straits
of Hormuz, Gwadar, being bulit in Baluchistan coast, would
enable Pakistan take control over the world energy jugular and
interdiction of Indian tankers”. Reported in http://
economictimes.indiatimes.com/paks-new-port- has-strategic-
implications-for-india- mehta/articleshow/2720950.cms.
38 Expansion of the Karakoram Corridor: Implications and Prospects
connect with Gwadar increases China’s ability to guard its
interests in the Persian Gulf, and makes the threat a
permanent one for India as claimed by Pakistani
bloggers.97 Termed as the Chinese Gibraltar,98 Gwadar is
merely 72 kms from the Iranian border, and is used as a
forward base and a listening post99 to monitor US and
Indian naval activity in the Arabian Sea as well as any
future US-India maritime cooperation in the Indian
Ocean.100 The base will soon have a modern air defence
97 Abdus Sattar Ghazali, “India Alarmed on Chinese built Gwadar
Port”, March 9, 2009, http://pakistankakhudahafiz.wordpress.
com/2009/03/09/india-alarmed-on-chinese-built-gwadar-port/.
Indian analysts have even expressed their concern about the
China-Pakistan-Myanmar triangular relationship. See http://
www.southasiaanalysis.org/%5Cpapers5%5Cpap er401.html;
40% of global oil trade occurs through Persian gulf
98 An analytical peace titeled “China Opens Strategic Seaport in
Pakistan”, available at http://johnib.wordpress.com/2007/04/
04/china-opens- strategic-seaport-in-pakistan/
99 Sudha Ramachandran, “China’s pearl in Pakistan’s waters”, Asia
Times Online, May 4, 2005, available at: http://www.atimes.com/
atimes/South_Asia/GC04Df06.html
100 Under the doctrine of High Sea Defence, China envisions control
of Indian Ocean. Gen Zhao Nanqi, Director of the General Logistic
Department of the PLA, says, “We can no longer accept the Indian
Ocean as only an ocean of the Indians”. Beijing has no doubts
that India would oppose China’s strategic surge as Zhao states,
“We are taking armed conflicts in the region into account”. http:/
/ w w w . c e n t r e a s i a . o r g / m e d i a / f i l e s / P a p e r _ N o t _ I n d
ias_Ocean_Perceptions_of_Cinese_Presence_in_the_India
n_Ocean.pdf
39Expansion of the Karakoram Corridor: Implications and Prospects
unit, a garrison, and a first-rate international airport.101 In
near future, China will also be able to use the Pakistani
ports of Pasni, Jiwani and Sonmiani as they develop. India
is also wary of future joint Chinese and Pakistani naval
operations against the Indian presence in the Indian Ocean
Region. China and India are growing economies
desperately dependent on oil and gas for their growth. It
is estimated that by 2012, India’s oil demand will
quadruple to 320 million tonnes of oil, but at the same
time, Chinese demand will be 600 million tonnes. Given
the depleting portfolios of hydro- carbons and increasing
competition over resources; the safety and security of the
Hormuz Strait becomes as much essential for India as
China. But out of these two emerging economies, China
is taking more proactive measures to safeguard its future
as far as its energy needs are concerned.
In the coming years, economic development as a result of
expansion of the KC will inevitably create interdependence
among some of the regional countries and add to concerns
of others. China’s warming up to Iran and Afghanistan
may pose challenges for India in sustaining its political
leverage in these countries. NATO had, in the past, asked
China to play a greater role in Afghanistan, by providing
it with a supply link through Xinjiang as an alternate safe
101 “Chinese Navy Participates in Multinational Naval Exercises in
Arabian Sea”, Embassy of the People’s Republic of China in Islamic
Republic of Pakistan, China-Pakistan Relations, 16th March,2007
available on http://pk.china- embassy.org/eng/zbgx/
t304172.htm
President Musharraf said that the navies of Pakistan and China
must collaborate for peace and security of the seas.
40 Expansion of the Karakoram Corridor: Implications and Prospects
route.102 India, aware of Sino-Pak intentions has termed the
KKH as Pakistan’s grand strategy aimed at consolidating
the so-called Trans-Asian axis103 and to isolate India and
diminish its influence in Afghanistan and Central Asia.104
According to the deputy general of the China Council for
National Security Policy Studies, Li Qinggong, the Sino-
Pak partnership and KKH connectivity will be helpful in
allowing China to enhance its presence and undertake
security and development in Afghanistan.105
According to media analyses in India, China perceives
USA as a destabilising force in the region and for its
increasing influence close to its politically sensitive
province of Xinjiang. The land connectivity and close
neighbourly relations with Pakistan are therefore, used by
China to balance out such threats. On some occasions, it
has shown its displeasure; by trying to obstruct visit of
American geological team in 2004, and more recently
102 “NATO May ask China for Afghanistan Support,”Associated Press,
February 3, 2009 available at: http://www.msnbc.msn.com/id/
29468470/
103 Stephen Hynd, “China Eyes its Afghanistan Moves”, Roundup,
December 1, 2009, available at: http://pragati.nationalinterest.in/
2009/12/china-eyes-its-afghanistan-moves/
104 Hussain, R. 2005: 181
105 Stephen Hynd, “China Eyes its Afghanistan Moves”,
Roundup,December 1, 2009, available on http://pragati.
nationalinterest.in/2009/12/china-eyes- its-afghanistan-moves/
41Expansion of the Karakoram Corridor: Implications and Prospects
American soldiers in 2009, to Gilgit-Baltistan.106 Given
China’s growing economic and political muscle, many
security experts now believe that if an independent
Kashmir becomes a reality in future, given its interest and
penetration in PoK, China will benefit more than any other
country in the region.
Chinese and Central Asian experts like Nicklas Norling
believe that Pakistan, which is central to Chinese national
security interests, is what Israel is to Washington. They
think it is a swing state whose geopolitical alignments
could go either way. The current Chinese out- of-
proportion investments in Gilgit-Baltistan including
expansion of the KC is seen as an effort to win this tug of
war with the US to protect its strategic advantage. On the
other hand, the Sino-US love-hate relationship has allowed
Pakistan to accrue economic and political benefits from
both.
How Highway Diplomacy Shapes FuturePolitical Scenario
As has been stated above, the KC project would enhance
China’s strategic presence in the region and have political
implications on Gilgit-Baltistan as well as the entire region.
It may also bring together some of the regional countries
and could even lead to long-term interdependency and
emergence of a security block. While KC may not yet
106 B.L. Kak, “China-Pak Dispute Across J&K LoC, The Daily Excelsior,
October 3, 2004, available at: http://www.jammu- kashmir.com/
archives/archives2004/kashmir20041003b. html
42 Expansion of the Karakoram Corridor: Implications and Prospects
become an economically viable route, its potential to help
form a partially integrated regional political block is high.
The KC diplomacy may eventually make China, Pakistan,
Iran,107 Afghanistan and Central Asian countries
interdependent allowing China to play the role of a high-
value security guarantor.108 Chinese investments in these
countries are perceived as a counter balance to the Western
influence. Some security experts consider the close energy
cooperation among Iran, Pakistan and China and
development of KC as “a possible strategic defeat for USA
in the new great game.”109 China is banking on threat
perceptions among the Muslim countries, which see the
West encroaching on their strategic space. On Feb 4, 2010,
Pakistan’s permanent representative to the UN, Hussain
Haroon suggested broader Islamic countries cum China
NATO-style alliance to replace the NATO in Afghanistan.
The Muslim BIG (business and investment gala),
conference in Karachi in 2006 attended by Chinese and
Middle Eastern representatives, can be seen as an effort by
107 “Jamaat-e-Islami proposes 4-nation bloc against US and NATO’’,
Daily Times, June 01, 2009 available on http://
www.dailytimes.com.pk/default.asp?page=2009%5C06%
5C01%5Cstory_1-6-2009_pg7_35
108 Air Commodore (Retired) Tariq Mahmud Ashraf, “Future Sino-
Pak Relations and War on Terrorism”, available at: http://
www.grandestrategy.com/2008/04/future-sino- pak-relations-
and-war-on.html
109 Air Commodore (Retired) Tariq Mahmud Ashraf , “Sino-Pakistani
Defense Relations and War On Terrorism”, Terrorism Monitor,
Volume 6, Issue 8, available at: http://www.jamestown.org/
programs/gta/single/?tx_t tnews%5Btt_news%5 D= 4862&tx_
ttnews% 5BbackPid%5D=167&no_cache=1
43Expansion of the Karakoram Corridor: Implications and Prospects
Pakistan to cement such relations and assume the role of
a lynchpin for itself.
The long-term Sino-Pak interdependence will compel
China to protect Pakistan’s interests in Gilgit-Baltistan, and
allow the political impasse between India and Pakistan to
linger. This can be corroborated from a statement by
former Pakistani minister of railways, Haji Ahmed Bilour,
who said that Chinese projects and funds “will increase
China’s dependency upon us and ultimately they will be
more cooperative towards us. We count on them for many
reasons.”110
Rejuvenated by Chinese monetary support, Pakistan will
be in a better position to annex Gilgit-Baltistan, as
economic integration and enhanced connectivity will also
lead to political integration.111 China realises that its
investments in Pakistan and PoK be wasted112 if Pakistan
loses Gilgit-Baltistan. It benefits Pakistani interests to
prolong the Kashmir dispute and enhance resource
exploitation. However, some Pakistani analysts have
indicated that resentment and dissent in Gilgit- Baltistan
may well grow simultaneously as China and Pakistan
might fail to address political and economic needs of the
110 “Rs 72 million contract awarded for feasibility of Pak- China
Railway Service”, available on http://www.defence.pk/forums/
economy- development/32761-rs-72-million-contract-awarded-
feasibility-pak-china-rail-service.html
111 W.M. Dobell, “Ramifications of the China-Pakistan Border
Treaty”, Pacific Affairs, Vol. 37, No. 3, Autumn, 1964, pp. 283-295.
112 Vikram Sood, op cit.
44 Expansion of the Karakoram Corridor: Implications and Prospects
local people by depriving of them of resource revenues
and royalties on natural resources.113
Such deprivations will also help nationalists gaining
political leverage and expand their base.
The leverage that KC may give to Pakistan will eventually
help move it a step up from the current observer status.
The ambassador of Pakistan to China Masood Khan while
addressing the SCO transport ministers’ forum114 said:
In our view enhancing connectivity is absolutely vital if
SCO is to push forward a trans-regional agenda. Pakistan
considers herself as the lynchpin connecting different
regions of Asia with Europe and Africa. It provides the
shortest access to the warm waters of the Arabian Sea for
Central Asia and China. Pakistan is building a North
South Trade and Energy Corridor. This corridor of Roads,
Railways and Energy pipelines along with manufacturing
bases will not only be an instrument for Pakistan’s
development; it will link SCO members and create a
Eurasian land-bridge to connect the Atlantic Ocean to the
Pacific by overland rail, road and energy networks. SCO
is a powerful vehicle for realising this vision, and for
creating a harmonious region.
Russia, a major player of SCO, may also support Chinese
efforts to divert global oil conduits overland, which would
reduce Western control of international sea-lane trade.
Such an initiative supports the commercial aspirations of
113 “Bloodshed in Chilas”, Editorial, Dawn, February 20, 2010,
available at: http://archives.dawn.com/archives/32599
114 “Pakistan a vital lynchpin connection to South, Central, West Asia,
Western China”, November 11, 2009 available at: http://
blog.travel- culture.com/2009/11/11/pakistan-a-vital-lynchpin-
connection-to-south-central-west-asia-western-china/
45Expansion of the Karakoram Corridor: Implications and Prospects
east Russian regions and also protects Russia’s strategic
interests. In the end, the conduit may become the vehicle
to carry the Sino-Pak relationship to its perceived logical
end, which is the domination of Asia.
The only question is: what volume of goods and fossil fuels
must pass through Gilgit-Baltistan so as to prove its worth
as the primary transit route for China and Central Asia?
The answer lies in several factors including dealing with
the terrain, regional political issues, local rights’ issues,
lack of stability in Pakistan and the brewing civil- military
rivalry, which can adversely affect the gestation period as
well as productivity of the project.
Moreover, the fear of extremists taking over Pakistan may
put a question mark on ‘ever-green’ Sino-Pak friendship.
If Pakistan becomes a failed state due to an economic
meltdown or a civil war, then it will be in China’s interest
to extend its military presence further south of Xinjiang,
to create a buffer zone and take pre-emptive action against
the extremists before they take over the border regions of
Pakistan. This will also enhance China’s capability to
control any possible Uyghur dissent in Xinjiang. In the
long run, China may stake its claim in Gilgit-Baltistan and
also become a party in the dispute. This may lead to
retaliation from India and the West, and create turmoil in
the region.
An India-China Convergence Zone?
There is also a view in Gilgit-Baltistan that greater Indo-
China economic integration and reduced dependence on
Pakistan for strategic needs may one day compel China to
46 Expansion of the Karakoram Corridor: Implications and Prospects
transform Gilgit-Baltistan into a convergence zone.
Further, trade via KC with India and South-east Asia can
bring large-scale prosperity to the region. It may also help
arms reduction resulting in political stability in the region.
Such a scenario may allow the people of Gilgit-Baltistan
to establish political and economic relations with India.
Conclusion
China has a huge and long-term presence in Gilgit-
Baltistan and is building an extensive road, bridge and
telecom network to sustain it. The drivers compelling
China to develop the Karakoram Corridor are diverse and
mainly pertain to its economic, strategic and political
ambitions. However, the projects, which currently serve
strategic and economic interests of the investor, need to
promote the interests of the local people and enhance their
decision-making power and control over project revenues,
on a priority basis. Growing Chinese interference in local
affairs will create friction among different stakeholders and
instability in Gilgit-Baltistan. Chinese and Pakistani control
over resource-revenues may be a short-term tactical move,
but will fail to provide any long-term strategic gains.
China considers its investment as a way to revive
Pakistan’s economy and save it from becoming a failed
state. Pakistan’s survival is key to Chinese dominance and
influence in South Asia and the Muslim world. The
Karakoram Corridor binds Central Asia, Afghanistan, Iran,
Pakistan and China into a regional security bloc, which
will be an anti-route to counter Indian and Western
influences in the region. However, a regional bloc, which
involves South Asian countries, but works against the
47Expansion of the Karakoram Corridor: Implications and Prospects
unity of South Asia will be counter-productive. It will
become a tool to protect the interests of the Middle East
and China in South Asia, and therefore will fail to address
the needs and concerns of SAARC member-states. Instead
of weakening SAARC, Pakistan should rather help make
SAARC a functional bloc, and promote economic
integration of members, which in turn will help solve the
Kashmir issue.
The only question is: what volume of goods and fossil fuels
must pass through Gilgit-Baltistan so as to prove its worth
as a primary transit route for China and Central Asia? The
answer lies in several factors including dealing with the
terrain, regional political issues, local rights issues, lack of
stability in Pakistan and brewing civil-military rivalry,
which can adversely affect the gestation period as well as
productivity of the project.
Readings
Chitkara, M. G. (1996), Nuclear Pakistan’. APH Publishing, New Delhi.Cooley, J. (2002), Unholy Wars: Afghanistan, America, and International
Terrorism, Pluto Press, LondonHopkirk. P. (2001), The Great Game: On Secret Service in High Asia. OUP,
Oxford.Hussain, R. (2005), Pakistan and the emergence of Islamic militancy in
Afghanistan, Ashgate Publishing, Surrey.Isapahani, M. Z. (1989), Roads and Rivals: The Politics of Access in the
Borderlands of Asia, I. B. Tauris & Co Ltd. Publishers, London.Jianming, W. (2010), China’s Western Development Programme in
Xinjiang (2000-2009), Unpublished Thesis, Centre for South,Central and Southeast Asian Studies, School of InternationalStudies, JNU, New Delhi, India
Kondapalli, S. (2007), ‘China-Pakistan Border Dispute: Old Issues &New Developments’, World Focus, January 2007 pp 26-31
Starr, S. F. ed. (2004), ‘Xinjiang: China’s Muslim Borderland, Central AsiaCaucus Institute, ’ London.
48 Expansion of the Karakoram Corridor: Implications and Prospects
ANNEXURES
Annexure I
The total length of the KKH from Islamabad to Kashgar,
Xinjiang is 1,300 kms of which 806 km lie within Pakistan
and Gilgit-Baltistan. At Hassanabdal, it is connected to the
Peshawar-Islamabad Highway.115
Length (KM) Major Cities Minor Cities Towns
0 Hassanabdal
33 Haripur
41 Sarei Saleh
54 Havelian
70 Abbottabad
86 Qalanderabad
94 Mansehra
110 Doddial
115 Shikiari
140 Battal
148 Sharkool
165 Batgram
187 Daut
181 Thakot
218 Besham
257 Pattan
115 Over the length of KKH between Havelian and Khunjerab Pass,
94 bridges were constructed to support the road structure.
49Expansion of the Karakoram Corridor: Implications and Prospects
294 Komila
352 Sazin
416 Chilas
470 Raikot
500 Jaglot
540 Gilgit
570 Rahimabad
630 Aliabad
636 Ganish
683 Pasu
720 Sust
755 Dhe
806 Khunjerab Pass
Length (KM) Major Cities Minor Cities Towns
Annexure II
Items traded through KKH between Pakistanand China
None of these items are produced or manufactured in
Gilgit-Baltistan. KKH is essentially a transit route to
transport Pakistani and Chinese goods with no transit
revenues for the locals.
Exports: Dates, wooden decorations, non-stick tawas, ore,
lead, fans, rice, bed sheet, shaving cream, agarbatti, ready-
made garments, shoes, salt, zari cloth, Portland cement,
sports goods, packing material, prayer mats, dry fruits,
brass/onyx decoration pieces, herbs, cotton cloth, henna,
utensils, mangoes, kinnow, cotton fabrics, other textiles,
minerals, sports goods, cutlery, surgical goods, fruits,
industrial alcohol.
Imports: Shoes, garments, winter clothing, cloth, blankets,
pens, ball pens, sports items, toys, crockery, electronics,
auto parts, decoration pieces, watches, fresh and dry fruits,
machinery, rugs, tires, hardware, sanitary ware, mobile,
computer accessories, cosmetics, cement, drilling
equipment, artificial jewellery, decorations, glasses and
crockery, shoes, garments, lighters, and foreign cigarettes,
building machinery.
Annexure III
Salient Features of the Project for Expansion ofKarakoram Highway
Project cost: U$ 510 million (70 per cent loan by China Exim
Bank and 30 per cent by GOP) Project start year: 2008
Construction agencies: Pakistan’s National Highway
Authority (NHA) and China’s State-owned
Assets Supervision and Administration Commission (SASAC)
Contractor: M/S China Road and Building Corporation
(CRBC)116
Contract duration: 4 years (48 months)
Tunnels: 19
New bridges: 32
Improvement of existing bridges: 92
Progress on KKH expansion in Pakistan: 17 per cent
Progress on KKH expansion in China: China has finished
upgrading KKH in her territory
Progress in Central Asian countries: Work under progress
116 CRBC will also import construction machinery and equipment
52 Expansion of the Karakoram Corridor: Implications and Prospects
Annexure IV
List of the Projects being undertaken in Gilgit-Baltistan with Chinese support.
Both Pakistan and China consider land connectivity via
Gilgit-Baltistan and Xinjiang imperative to ensure the
sustainability and timely completion of these projects as
well as initiation of new projects in future. All the projects
are being undertaken with monetary, technical,
manpower, machinery, and equipment support from
China.
1. Chinese Consulate in Gilgit117
2. Five concrete bridges along Gilgit-Skardo road
3. Gilgit-Skardo Highway up-gradation project:
involving expansion and re-alignment of 175 km
existing paved road, which links Baltistan with
Pakistan
4. Khunjerab Pass Tunnel (Friendship tunnel)
5. Concrete-base suspension bridge, Darel Valley
6. Concrete-base suspension bridge, Tanger Valley
7. Concrete-base suspension bridge, Yasin Valley
8. Concrete-base suspension bridge, Gupis Valley
9. Concrete-base suspension bridge, Shigar Valley
10. Diamer Dam, $12.6 billion, 4500 MW
11. Bunji Dam, $7 billion, 7000 MW
12. Pratab Bridge near Bunji Dam
117 http://pamirtimes.net/2008/01/27/chinese-consulate-being-
established-in-gilgit/
53Expansion of the Karakoram Corridor: Implications and Prospects
13. Naltar Power Project-I 16 MW
14. Naltar Power Project-II 16 MW
15. Naltar Power Project-III 18 MW
16. Shagarthang hydel scheme, 26 MW
17. Yulbu hydel project, costing $6 billion and
generating 3,000 MW118
18. Phander hydel project costing $70 million and
generating 87 MW
19. Basho hydel project costing $40 million and
generating 26 MW
20. Daso hydel project costing $7.8 billion
21. Harpo hydel project costing $44.608 million
22. Land Development Project, Sadpara Dam
23. Land Development Project, Manawar-Gilgit
24. Building air-strips on KKH for fighter planes119
25. Sost dry port construction and up-gradation project
26. Joint venture of Sino-Pak Sost Dry-port Ltd.120
27. An integrated border management, overland trade
and trans-border economic and investment zone
replicating China-South East Asia Economic
Cooperation module
28. China-specific special economic zones in Gilgit
29. China-specific special economic zones along the
KKH near major towns
118 http://www.groundreport.com/Business/Indo-China-
Diplomatic-War-Over-Kashmir_3/2915924
119 Representatives of the local political parties like BNF, KNM,
GBDA claim existence of 16 such air-strips on KKH
120 http://pk2.mofcom.gov.cn/aarticle/chinanews/200702/
20070204398824.html
54 Expansion of the Karakoram Corridor: Implications and Prospects
30. China-specific special industrial zone in Gilgit over
an area of 1,500 acres121
31. Several mining leases awarded to Chinese
companies122
32. Air connectivity from Gilgit and Skardo to Kashgar
33. Chinese bank branches in Gilgit-Baltistan
34. Energy and trade corridor, involving gas and oil
pipelines
35. Cross-border cable system123
36. Fibre-optic lines through the Khunjerab Pass
tunnels124
37. ZTE telecom of China
38. Zong China Mobil Ltd.
39. Huawei telecom industries of China
Some other projects which may most likely attract Chinese
financial and technical influence:125
1. Pakistan-Tajikistan Highway via Ghizer and
Wakhan
2. Up-gradation of airports at Gilgit and Skardo:
Skardo has been declared an international airport
to facilitate flights from Kashgar and Katmandu
3. Up-gradation of Skardo air-field
121 http://www.thenews.com.pk/print1.asp?id=215164 Friday,
December 25, 2009
122 Political leaders of BNF claim that Chinese companies have
already received mining contracts over 300 sites in Gilgit- Baltistan
123 http://pk2.mofcom.gov.cn/aarticle/bilateralcooperation/
bilateralagreement/200706/20070604805796.html
124 http://propakistani.pk/2009/03/21/china-mobile-offers-to-lay-
country-wide-fibre-optic-cable/
125 Based on personal conversation with officials in Gilgit-Baltistan
55Expansion of the Karakoram Corridor: Implications and Prospects
4. Establishment of a second dry port at Jutal-Gilgit
to store machinery for up coming projects of
Balakot Model City, Diamer dam, and Sino-Pak rail
project
5. Establishment of regional and national grid up to
Gilgit-Baltistan
6. Exploitation of gold reserves: Gold quality in Gilgit-
Baltistan is claimed to be the best in the world with
up to 300 ppm
7. Cement industry
8. Marble cutting and finishing industry
9. Gems finishing industry
10. Skardo Katzura Dam with power generating
capacity up to 15,000 MW
11. Raikot hydel Gilgit, 675 MW
12. Tangus hydel Skardo, 625 MW
13. Doijan hydel Astore, 350 MW
14. Altit hydel Hunza, 250 MW
15. Ghwari hydel Ganche, 20 MW
16. Passu hydel Hunza, 10 MW
17. Barugah hydel Gilgit, 10 MW
18. Henzal hydel Gilgit, 20 MW
19. Tangir hydel Diamer, 10 MW
20. Yulbu hydel Skardo, 710 MW
21. Shangus hydel Skardo, 625 MW
22. Kanchi hydel Gilgit, 122 MW
23. Hanuchal hydel Skardo, 16 MW
24. Import of LPG from Xinjiang to Gilgit-Baltistan
25. Import of coal from Xinjiang to Gilgit-Baltistan
26. Import of livestock from Xinjiang to Gilgit-Baltistan
27. Diversion of Shiva-thung River
56 Expansion of the Karakoram Corridor: Implications and Prospects
Annexure V
Chinese Projects in ‘Azad Jammu andKashmir’ and rest of Pakistan
In addition to heavy Chinese presence in Gilgit-Baltistan,
Chinese companies are currently undertaking projects in
Pakistan, and Pakistani occupied Muzaffarabad-Mirpur
region of J&K. Some of them are as under:
1. Sino-Pak Joint Investment Company with $200
million initial capital
2. Thar coal mining project with estimated $6 trillion
worth 33 trillion tons of coal reserves
3. China’s Sino Coal Company taking Thar coal
mining project with reserves worth 185 billions
tones
4. China-specific SEZ in Gwadar
5. $3.5 billion Saindak copper extraction project126
6. $4.5 billion Gwadar-based Chinese oil refinery with
a capacity of ten million tons per annum.
The facility would refine Chinese imports of crude oil from
the Gulf countries, and export petroleum products to
Xinjiang via KC127
126 http://english.peopledaily.com.cn/200603/23/eng20060323_
252956.html
127 All China Federation of Commerce and Industry, Hu Deping, told
President Musharraf during his 2006 Shanghai visit
57Expansion of the Karakoram Corridor: Implications and Prospects
7. Transfer of excess capacity of Chinese petroleum
industry to Gwadar, bringing in estimated
investment of $13 billion128
8. An oil and gas pipeline from Gwadar to Xinjiang
via Gilgit-Baltistan
9. Development of Gwadar Port Energy Zone
10. Gwadar-based Yangtze River oil refinery – a
collaboration of Saudi and Chinese companies
11. Chinese oil and gas exploration projects in Pakistan
12. Chinese Reko Diq copper mining129 which is four
times larger than Saindak mine
13. Rail link from Gwadar to Dalbandin130
14. Rail track from Quetta to Kandahar131
15. M/s Railcop completed Chaman Spinbuldak
(Afghanistan bordering town) rail link in 2004 at the
cost of Rs 417 million132
16. Rail track from Peshawar to Jalalabad
17. Rail track from Gwadar to Iran
18. Construction of rail coaches in Pakistan
19. Huawei, Chinese telecom equipment production,
technology transfer and R&D: Investment up to $8.3
million in Pakistan
128 http://livenreal.com/news/chinese-mulling-13b-investment-in-
gwadar/; The China Chamber of Petroleum Industry (CCPI) and
All China Federation of Industry and Commerce (ACFIC)
conveyed to Pakistani authorities
129 http://www.atimes.com/atimes/South_Asia/LA12Df03.html
130 h t t p : / / w w w . t h e s o u t h a s i a n . o r g / a r c h i v e s / 2 0 0 9 /
empowering_gilgitbaltistan_or.html
131 http://pk.china-embassy.org/eng/zbgx/t620067.htm
132 http://www.andrewgrantham.co.uk/afghanistan/tag/china/
58 Expansion of the Karakoram Corridor: Implications and Prospects
20. China International Water and Electric Corporation
(CIW&EC) constructing a bridge over Jhelum River
21. $12.6 billion Neelum-Jhelum Hydroelectric Power
Project in PoK by CGGC-CMEC Consortium China
22. $1.5 billion Neelum River (Kishanganga) water
diversion project,133 involves a 42-km underground
tunnel
23. Kohala Power project in PoK by China International
Water & Electric Corporation (CWE) worth $2.155
billion and generating 1,050 MW
24. Up-raising of Mangla Dam to 60 feet134
25. $300 million project in Muzaffarabad by China
International Water and Electric Corporation and
China BEIXIN Construction and Engineering in
housing, communication and rehabilitation sectors
26. Chinese telecom giant China Mobile
Communication Company purchased Pak telecom
company Paktel
27. China Mobile Pakistan with 4,500 base stations
covering 6.5 million peopleat 3,500 locations in the
four provinces, Northern Areas and Azad Kashmir
28. China Mobile to pump $2.2 billion into Pakistan135
29. Zong telecom company investing US$500 million;
Zong plans to have 10,000 sites by the end of 2009
30. China telecom equipment maker ZTE operational
in Lahore and Islamabad
133 Eemploys 1,100 Chinese engineers and workers
134 http://www.groundreport.com/Business/Indo-China-
Diplomatic-War-Over-Kashmir_3/2915924
135 http://pk2.mofcom.gov.cn/aarticle/chinanews/200703/
20070304455777.html; http://pk.china- embassy.org/eng/zbgx/
t467154.htm
59Expansion of the Karakoram Corridor: Implications and Prospects
31. Medium scale hydel project in FATA
32. Petrochemical complex at Gwadar
33. Support developing nuclear program as both
countries have a nuclear deal
34. Two nuclear power plants Chasnupp 1 (300 MW)
and Chasnupp 2 (300 MW) completed at Mianwali
35. CHASNUPP-3 (600MW under construction) and
CHASNUPP-4 (2000 MW) under implementation at
Mianwali
36. Two textile mills in NWFP, two sugar mills in
Sindh, a copper mine in Saindak receiving $29
million loan
37. Upgrading of Heavy Mechanical and Electrical
Complex
38. Execution of the Heavy Foundry and Forge
39. A tritium gas purification plant at Khushab
40. Building a missile boat for the Pakistan Navy at the
cost of $19 million
41. Supporting expansion and modernization of Wah
Ordinance Factory
42. $600 million worth Sinda-Jherruk coal project in
Sindh
43. Sinda-Jherruk 405 MW power generation project in
Sindh
44. $300 million credit to complete reconstruction
projects in Azad Kashmir
45. China helping with Muzaffarabad city development
project with total allocation of $190 million in 90
projects. In Bagh 50 projects will $123.55 million; 30
projects in Rawlakot city will cost $38.83 million.
Projects include govt buildings, roads, bridges,
shopping centres, satellite towns, play grounds,
60 Expansion of the Karakoram Corridor: Implications and Prospects
telecom facilities besides education and health
facilities.
46. Thermal and fertilizer plants in Sindh
47. Meat-packing in Peshawar
48. Lumena Resources Corp. and KASB Group of
Pakistan joint venture. As incentive, Pakistan allows
100% foreign equity in the major sectors and full
repatriation of profits and dividends in all the
sectors.136 Companies that set up factories get a ten-
year tax holiday; don’t need a Pakistani partner and
are free to bring in foreign partners; there’s no tax
on equipment; goods will be brought into the
economic zone by road but will be processed by
customs in the zone.
49. $200 million investment in an industrial estate in
Faisalabad over 1,800 hectares
50. Ruba Group of Pakistan and Haier Group of China
joint venture on a 4,300-acre industrial park and
special economic zone (SEZ), the first private
venture in Pakistan
51. Bus manufacturing Xiamen King Long Automotive
to start operation in Lahore Pakistan
52. Ten China-Pak Joint SEZs to come in different parts
of the country
53. Also planned are SEZs in Karachi, Islamabad,
Peshawar and along the Karakoram Highway
54. Chinese developers were leased 12,000 acres of land
in Gwadar to establish SEZ
55. Shanghai-headquartered electronics group SVA to
include projects in Pakistan in housing,
infrastructure, power and mining
136 http://www.atimes.com/atimes/South_Asia/KL16Df02.html
61Expansion of the Karakoram Corridor: Implications and Prospects
56. State owned China Metallurgical Group, Ruba is
building houses in Islamabad for the Defence
Housing Authority in a $5 billion, seven-year
project
57. Presently Chinese projects worth $40 billion are at
various stages of implementation
58. Two Chinese companies undertaking projects
included up gradation of airport, 147 km of roads,
14 bridges, 13 commercial markets, 12 public parks,
four satellite towns, five bus terminals, water
supply, sewerage and electric network project in
PoK
59. China helping with Muzaffarabad Master Plan
(2006-16) envisage 2,782 acres land for building a
dry-port
60. Tianjin Zhongbei Harbor Engineering Supervision
Corp., China Harbor Engineering Company Group,
MCC and the Bureau of Geophysical Prospecting
(BGP) are working on a range of projects in
Baluchistan. The Chinese have exclusive oil
exploration rights in Baluchistan
61. China Harbor Engineering Co. is building an
international airport in Gwadar
62. China’s Great United Petroleum Holdings is
developing a $13 billion oil refinery
63. China constructing shopping malls in Lahore
64. China helping with thermal and solar energy
projects, irrigation and fisheries in Sindh
65. China setting-up a telecommunications university
and research complex in Pakistan
62 Expansion of the Karakoram Corridor: Implications and Prospects
66. Gomal Zam Dam project nearing completion137
67. Twelve medium and 32 small dams costing $1
billion irrigating 650,000 acres allocated to Chinese
companies in different parts of Pakistan especially
Sindh and Balochistan
68. China and Pakistan are developing a special textile
zone in Faisalabad138
69. Fifty Chinese companies involved in assembling
two-wheelers in Pakistan
70. Between 1971 and 1978, China assisted Pakistan in
building two defence-related mega projects, first,
the Heavy Rebuild Factory for T–59 tanks, and
second, the F–6 Aircraft Rebuild Factory.
71. Chinese major projects include Pakistan’s steel
mills, ship building, aircraft rebuilding and
assembly, Binqasim and Karachi ports, upgrading
of Pakistan Railways
72. Jinnah Naval Base at Ormara Balochistan
73. Expansion of Pasni port
74. Coastal Highway Baluchistan, connecting with
Karachi in east and Iran in west
75. Attock cement factory has 14 Chinese engineers
working
76. Gomal zam canal project completed
77. Chinese service and spare parts centre in Peshawar
for Chinese rickshaws
78. Phase II of Gwadar seaport
79. Saindak Gold mines
137 http://news.rediff.com/column/2009/aug/28/raman-chinas-
growing-role-in-pakistan-occupied-kashmir.htm
138 http://pk2.mofcom.gov.cn/aarticle/chinanews/200610/
20061003447531.html
63Expansion of the Karakoram Corridor: Implications and Prospects
80. Hub Hydroelectricity Project
81. Chinese assisted project include a textile mill in PoK
82. Huawei laying Karachi-Hong Kong Optical Fibre
network for the PTCL; Huawei is the only vendor
which serves all the mainstream telecom operators
of the country
83. Department of Fisheries, Government of Sindh and
South China Sea Fisheries Research Institute,
Chinese Academy of Fishery Sciences signed an
MoU to cooperate on marine fisheries and related
technologies
84. Sino-Pak collaboration in drip irrigation and hybrid
cotton, wheat and rice production
85. Huawei updating Pakistan Electronic Government
Directorate with $1 million
86. Gwadar naval base
87. Chinese telecom to invest $300 million in Total
Telecom139
88. LNG terminals and petrochemical complex at
Gwadar built by China
89. Dadu lead-zinc mine project
90. China specific SEZ Kalashah Kaku near Lahore140
over 500 acres
91. China specific hi-tech zones will be established in
the country
92. China will establish engineering universities in
Lahore and Islamabad.
93. Pakistan China University (PCU) will be set up by
139 http://pk2.mofcom.gov.cn/aarticle/chinanews/200608/
20060802845720.html
140 http://pk2.mofcom.gov.cn/aarticle/chinanews/200703/
20070304415043.html
64 Expansion of the Karakoram Corridor: Implications and Prospects
the Higher Education Commission (HEC) for
science, engineering and technical education over
the next 10 years in various industrial zones
94. China to set up automobile plant, dairy develop-
ment, agro industry, real estate, tourism, housing
95. Pakistan and China Friendship Park
96. China involved in black plates shipment
97. $3 billion worth of joint ventures in chemicals,
construction, energy and tourism
98. Construction of School and Hospital in Mansehra
District by China along KKH
99. Sedimentation management of Terbela dam
100. Wind power generation
101. Wind mill manufacturing projects
102. Pakistan aeronautical complex, Kamra
103. Pakistan steel mill
104. Heavy engineering and motorcycle manufacturing
105. Indus Highway
106. Pakistan Cycle & Industrial Cooperative, Lahore
107. Saigols Qingqi Motors Ltd
108. Zhongxing Telecom Ltd
109. Sino-Pak Metal Foundry, Nooriabad
110. Sehala Chemical Complex
111. Pakistan Glass Ltd
112. Saif Nadeem Ltd
113. Haier Home Appliances
China has huge and long-term presence in Gilgit-Baltistan and is building extensive road, bridge and telecom networks to sustain it. The drivers compelling China to develop Karakoram Corridor are diverse and mainly pertain to its economic, strategic and political ambitions. However, the projects, which currently serve the strategic and economic interests of the investor, need to promote interests of the local people and enhance their decision-making power and control over project revenues on priority basis. Growing Chinese interference in local affairs will create friction among different stakeholders and lead to instability in Gilgit-Baltistan. Chinese and Pakistani control over resource-revenues may be a short-term tactical move, but will fail to provide any long-term strategic gains. The role that locals see for China in Gilgit-Baltistan is firstly, to withdraw from the occupied valleys of Shaksgam, Raskam, Shimshal, and Aksai- chin; secondly, to refrain from getting involved in the affairs of J&K including Gilgit-Baltistan; and thirdly, to persuade Pakistan to withdraw from PoK including Gilgit-Baltistan.This can help bring peace and stability to South Asia.
Senge H. Sering was born in Shigar, a valley in the disputed region of Gilgit-Baltistan. He finished his degree in textile engineering from University of Engineering and Technology, Punjab and Masters in Development Studies from University of East Anglia, U.K. During the 1990s, he worked as a cultural activist and helped revive the indigenous script in Baltistan. He also helped establish a non-profit organisation in the Shigar valley to promote education and health services for the local women. Later, he joined a project of Aga Khan Foundation and worked in the monitoring, evaluation and research department. During that time, he was also associated with Baltistan Cultural Foundation. In 2009, he was selected as a visiting fellow to the Institute for Defence Studies and Analyses, New Delhi. Currently, he is managing the Institute for Gilgit Baltistan Studies based in Washington DC. He is also the member of the board of directors of the Gilgit - Baltistan National Congress.